How Lowe’s Uses Customer Data to Drive Sales

by Smarter Building Materials Marketing

Doug Jennings joins us to share what Lowe’s is doing to collect data, how they’re using it and how building material manufacturers can apply the same tactics to improve their customer experience and sales.

More About This Show

The Smarter Building Materials Marketing podcast helps industry professionals find better ways to grow leads, sales and outperform the competition. It’s designed to give insight on how to create a results-driven digital marketing strategy for companies of any size.

In this episode, Zach and Beth talk to Doug Jennings, the Vice President of Data, Analytics and Customer Insights at Lowe’s.

Doug shares how Lowe’s uses big data to create a personalized customer experience for demographics across the country and also tells how building materials manufacturers can leverage data to build brand loyalty and sales.

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Data, Analytics and Customer Insights at Lowe’s

Doug’s group at Lowe’s was formed two years ago when the company decided to centralize their data collecting capabilities. Their goal?

To drive speed to decisions.

In order to achieve this, they brought together teams focused on both primary and secondary research trends, including an economics group, big data engineering, data science and an advanced analytics group. Now, they have the ability to assimilate different data points and perspectives.

Doug and his team can merge what the customer is telling them with actual behavior online and in the store. They use this holistic data to discover deeper insights that lead to better product assortment and staffing at specific store locations.

Lowe’s even uses big data to prepare stores for major weather events. They can trace post-hurricane shopping behavior and customers’ attitudes towards Lowe’s using different sets of data points.

For instance, after a storm, they collect data on perspectives around product availability, associate knowledge and accessibility. Then, their data team can validate potential opportunities to better serve their customers. Customer research gets them started, then the data is used to tell them what kind of action to take from an operational standpoint.

Collecting and Using Data

When collecting data, make sure to get several different types, such as first party, transactional, third party and internal data. You can then break down data points from each type into structured and unstructured.

Internal and structured data, for example, includes customer purchases, browsing history and behavioral interaction with call centers. You can also track interactions with post-sale services like installation and delivery.

The first step in using this type of information is to map it to orders or services. This lets you track the customer's journey, letting you know where they are in a project and how you can better market the next offer. The idea is to merge in-store behavior with online behavior.

For instance, if your customer recently purchased a large ticket item, such as a refrigerator, you wouldn’t want to send them communication about an upcoming sale on that item. Use your data to anticipate your customers’ needs accurately.

You can also use third-party external data from sources like Facebook and Twitter to find out what people are saying about your company. Then you can use that customer sentiment as part of your data ecosystem to better enhance the customer experience.

Prompted by one of Lowe’s executives, Doug and his team recently used all of their data sources to pull information on weather events for two decades to find how that influenced customer behavior. They were able to drill down on each type of storm to determine what kind of products to push to different locations.

The process of data analysis drives sales and it also serves the customer. For instance, you can use predictive analytics to load trucks specific to individual zip codes, so the right store gets the right type and amount of product. All of the information you need to increase sales and customer satisfaction can be derived from an integrated data team.

How to Segment Your Pro Audience

Pro behavior is more difficult to track, especially large national accounts that have multiple offices and purchasers. The biggest challenge is to figure out how to map that parent-child relationship within a pro business. For individual tradesman, the process is a little bit easier.

The first step in segmenting your pro audience is to understand what drives them. For Lowe’s, they know that pros who prefer the big box retail experience are brand loyal, need a depth of inventory, and want to get in and out of the store quickly.

Using that customer understanding, you can then craft your merchandising and sales approach to ensure you are getting the right product and pitches to the right people, based on demographics. It’s also important to make sure you have enough quantity to support the local pro market.

Changes in Consumer Behavior

One of the biggest changes seen in consumer behavior over the last few years is an increase in customer knowledge. This impacts everyone in the building materials industry, including manufacturers.

Customers have information at their fingertips, which means people come already armed with information and research. Retailers and manufacturers alike need to be able to match that need for content, both online and with employees.

The big trend is that customers are knowledgeable about your products, prices and competitors. What can you add that is useful? They still want additional help, whether it’s understanding the steps of the installation process or getting help in planning a remodel. There’s definitely an opportunity in leveraging data to inform your content strategy.

On top of information, customers now also expect convenience. We talk a lot on the show about the Amazon Effect and how these expectations have reached the building materials industry. You need to have information available all the time.

Accuracy is also a vital component of your content strategy. If you don’t display product details accurately online, it leads to a poor customer experience.

Manufacturers who are using data well are the ones who listen to the customer. It’s important to keep on top of how the customer is evolving and how they're using your products. How can you find out this information? Easy—they’re telling you every day on your website.

Big Data Advice for Manufacturers

We have several pieces of advice for building materials manufacturers looking to better leverage big data in their marketing and sales strategy. First, make sure you’re actually capturing your data and that you can trust it. You should always prioritize the quality of your data over the quantity of data.

Next, determine the key metrics that drive your business from both an input and output perspective. Figure out why customers shop your brand or shop at the retailer where your brand is sold. Then, identify the barriers as to why they may choose to not purchase your brand. From there, you can map those barriers to your lagging indicators (such as sales) and find a way to overcome them.

You can’t start by just looking at your bottom line. You need to begin earlier in the buyer journey and find the leading indicators that actually point to the results being achieved.

What’s Coming in Data and Analytics

One of Doug’s new initiatives is to delve deeper into shopper psychology; in fact, he’s even partnered with Ipsos, a market research company, and Duke University. The goal is to improve research methods at Lowe’s for understanding human behavior. They want to better understand what’s happening in the aisle and then train the organization in response to those findings.

Another upcoming trend is the role of artificial intelligence, including voice commerce and bots that can take over product ordering or talk to a vendor or retailer. In fact, we devoted an entire podcast to the role bots can play for building materials manufacturers. Text bots can answer questions easily and in a conversational way. The bottom line is that they can make the buyer journey much easier while delivering speed and personalization.

Lowe’s has also begun to embrace AI replacement in stores, which has been a hot topic for the company. While customer-facing robots come with many challenges, there are a lot of opportunities as well. Doug points to the potential of robotics taking over inventory counts so that employees can switch from tasking to selling. Humans won’t be ignoring customers simply because they’re scanning inventory.

Doug also mentions that today, devices that help run a home don’t talk to each other — but that’s starting to change. He foresees advances in diagnostics, for example, that can identify when an appliance needs service or is on its last legs.

Customer Data and Privacy

Privacy is an important topic when you start discussing how and when to collect data. There has been a lot of new legislation both in California and abroad surrounding customer data and privacy and how that information is collected, used and shared.

These legislative efforts can change how companies operate, store and use data moving forward. It can also be disruptive if you haven't had to manage customer data in a more robust way before; it can really change how you apply analytics and talk to customers.

At the end of the day, data usage is a balancing act: Customers expect you to know them, but the laws are changing how you can actually do that.

It is still possible, however, find effective ways to use data help you learn more about your customers and their buying habits to help grow your sales and leads. No retailer or manufacturer has unlimited resources, so it’s important to use data to optimize constraints and improve the customer’s experience.